9 Facts About CIBIL Score You May Not Know

It is perfectly normal for your credit scores to differ slightly between credit bureaus. There are a total of credit bureaus (Equifax, Experian, CRIF HighMark) in the country including CIBIL.

You must have come across the term CIBIL score, if you have been planning to take a loan or if you are looking to get a credit card. When you are borrowing any type of credit, banks and non-banking finance (NBFC) need to make sure that you have the ability to repay the borrowed amount. This is where the CIBIL score comes in handy for the credit bureaus. A CIBIL score gives lenders an idea about your financial health and helps them take a sound decision about lending credit. Majority of the people get confused with some of the common terms that are associated with CIBIL score. There are several write-ups you can find about CIBIL score, however, there are still some myths and misconceptions about the CIBIL score that people might not be aware off. Let’s take a look at some of the interesting facts about CIBIL score:

1. Your CIBIL score can vary from the credit score from other bureaus

It is perfectly normal for your credit scores to differ slightly between credit bureaus. There are a total of credit bureaus (Equifax, Experian, CRIF HighMark) in the country including CIBIL. Each of these credit bureaus have their proprietary algorithm which they use to calculate CIBIL score for consumers. Therefore, your CIBIL score can be different from your credit scores from other credit bureaus. Moreover, the credit scores differ as your updated credit information from different lenders gets reported to bureaus on different days.

2. Checking your CIBIL score will not bring it down

When you check your own CIBIL score it is termed as a soft enquiry and it is harmless. Multiple soft enquiries does not bring down your CIBIL score. You can check and review your credit report frequently and it will not hamper your CIBIL score. On the contrary, when banks, NBFCs or credit card companies run a check on your CIBIL score, it will affect your CIBIL score in a negative. When lenders check your CIBIL score, it is reported as a hard enquiry. You should take measures and avoid hard checks as it will slash your CIBIL score by a couple of points.

3. CIBIL cannot delete or edit information

There is a common myth that CIBIL officials can delete or make changes to your CIBIL report. This is untrue as the credit bureaus do not have the authority to edit or delete CIBIL reports. Any changes in the credit report can be made by the officials only after the changes are authorised and provided by the concerned credit source.

4. Closing old credit cards brings your CIBIL score down

You might not be using an old credit card and therefore you would want to delete it. However, deleting or closing old credit cards takes a toll on your CIBIL score. The age of your credit history is an important factor that affects your CIBIL score. Therefore, when you close your old credit card accounts, you lose your credit history which has a good repayment behaviour. This in turn affects your CIBIL score and pulls it down.

5. You can get one CIBIL report for free

In 2017, the Reserve Bank of India (RBI) made it mandatory for all the credit bureaus in the country to offer one free credit report to consumers in one financial year. This essentially means you can get four credit reports in a financial year from four different bureaus. These credit reports have a detailed summary of your credit history, repayment behaviour as well as your credit score.

6. You can still get a loan even if you have a low CIBIL score

Even if you have a low CIBIL score, you can still be eligible to get a loan or a credit card. Generally, a CIBIL score of 750 and above is considered as ideal by majority of banks and NBFCs. However, each bank has their own credit score cut-offs in respect to different type of loans. Also, if you have a low CIBIL score, you are not in a position to negotiate to get a better deal for your credit.

7. CIBIL score and CIBIL rank are not interchangeable

It must be noted that a CIBIL score and CIBIL rank are not interchangeable. A CIBIL score is associated with an individual while a CIBIL Rank is associated with companies. A credit rank indicates trustworthiness of a company while a CIBIL score indicates creditworthiness of an individual. A CIBIL Rank ranges from 1 to 10 and it is better to have CIBIL rank as close as to 1 to avail loan.

8. Your savings account is not considered by CIBIL

Your CIBIL score is connected with your credit account and has no relation to your savings account. Your CIBIL score is completely independent of the information like fixed deposit, savings account, current accounts etc. It is calculated only based on your repayment activities and credit history.

9. CIBIL Score and CIBIL Report are not the same

A CIBIL score is a three digit number between 300-900. The closer your score is to 900, better the chances for you to get credit. On the other hand, a CIBIL report is a summary of all your credit accounts and repayments. Your CIBIL report comprises your CIBIL score, your repayment history, your active and inactive loans, and so on.

Majority of people believe that if they don’t have a credit history, their CIBIL score will be excellent. This is a common misconception. If you don’t have a credit history, your CIBIL score is NA/NH. In order to build a credit history, you can start with a secured credit card that is issued against your fixed deposit. As soon as you use the secured credit card wisely and pay the monthly bills on time, you will slowly be able to build a credit history. It must be noted that it requires discipline and patience to improve your CIBIL score as it cannot be increased overnight. Your credit score and credit report change in accordance with your credit behaviour.

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